Lawmaker Seeks Compromise On Property Tax Classification That Could Cost Cabin Owners Big

MINNEAPOLIS (WCCO) -- The potential for a big spike in property taxes has Minnesota cabin owners who rent their properties calling on lawmakers to step in.

WCCO first told you about the tax classification change last week, meant to level the playing field in crowded rental market. Now, Liz Collin has spoken with Minnesota Sen. Tom Bakk, who is in the middle of the controversy that he hopes will be sorted out at the State Capitol.

Bakk says he's been getting an earful on a tax classification change, a move that targets short-term cabin rentals on Airbnb, Vrbo, or through property management companies.

"It's not an easy fix," Bakk said. "We understand when you lower someone's taxes it raises someone else's."

Collin reported last week what the change would mean for one cabin in Lutsen, as an example. The two-bedroom with current taxes of $5,800 would skyrocket to a $17,000 property tax bill if it shifts to the commercial property classification.

Jim Wherley is a resort owner in Richville who represents the Community of Minnesota Resorts.  With 125 members across the state, the nonprofit believes a change is long overdue.

"We don't mind the competition but we do mind they're not held on a level playing field," Wherley said.

From property taxes to Department of Health regulations, Wherley says income generating rentals should answer to the state.

However, in some cases Bakk has heard of assessors interpreting primary use differently, which he sees as the biggest problem. It's why he thinks a new category could be created, which resort owners also support.

"It could be a new classification, somewhere between residential or seasonal, recreational and commercial," Wherley said.

Striving for consistent tax policy before peak season arrives again.